29 AUGUST 1925, Page 4

TOPICS OF THE DAY

THE FRENCH DEBT

THE result of M. Caillaux's visit to London is that each side knows more accurately than ever before what is in the other's mind about the debt. If an agree- ment can be reached it will be reached soon. There has never been a better opportunity because since the War no French Prime Minister has had so marked a disposition and capacity for real politik. as M. Caillaux has. Just because he is a financier he is international or cosmopolitan in spirit ; he knows as well as any man in France how intimately French credit depends upon the esteem in which his country is held abroad. His avowed object is to restore French credit, and in both his brain and his heart he knows that esteem for France will go up by leaps and bounds if she pays her external debts. Indeed, we venture to say that if M. Caillaux were left to himself and could decide this matter in a politically watertight compartment, he certainly would not think it worth while to haggle about a payment of two and a half millions a year more than he has offered. He has, however, to reckon with his nominal supporters at home, who are ready on little provocation to set upon him the whole pack of hounds which are even now with difficulty restraining themselves from giving tongue about the " defeatist '! history of M. Caillaux.

By this time the British public has become, we imagine, quite bemused by all the figures which are dealt out daily in the Press about the French debt. Let us therefore try to disentangle as briefly as possible the figures which really matter. France owes to Great Britain in round figures £600,000,000 and to America £790,000,000 (includ- ing interest). She has not repaid any of this debt nor has she paid any interest on it. Meanwhile Great Britain is paying to America, by way of interest and sinking fund, over £35,000,000 a year, and is paying it on behalf of our Allies who through us borrowed money from America during the War. At the time when the money was borrowed Great Britain could not stop to parley ; the urgent immediate object was to win the War ; and when America at a certain point required Great Britain to back the bill before she would advance more credits to France and Italy, Great Britain consented.

Shortly after the War Great Britain would have been ready to cancel all debts as between the Allies. It was said, and for our part we heartily agreed with the argu- ment, that there was something odious in balancing money against human lives and against devastated districts. We had paid out much more money than France had paid, but France had lost more men and had seen some of her richest districts overrun and ruined. In course of time, however, America made it known that she intended to stand on the letter of the law. She intended to demand repayment for all the money she had lent. That announce- ment changed the whole situation. There was nothing for it, as we stated at once when the demand was made, but to pay our debt to America without arguing about it. We took the line that no moral question could possibly - enter into the transaction. We had borrowed money, we had signed our name to the bond, and when America asked us to redeem the bond there was nothing for men of honour to do but to submit. Mr. Baldwin went to America to fund the debt, and he succeeded in doing so on terms which in any other transaction would have been called considerate to us, but which nevertheless left us with a new burden to bear of over £30,000,000 a year. Now this burden, we repeat, is not our own debt to America, but is borne by us chiefly on behalf of France. It is from this burden and from this alone that we ask to be relieved.

According to the Balfour declaration, to the principle of which the British Government still clings, there is no thought of claiming from the French a payment greater than that which we owe on their behalf to America. That is a very generous proposal, we think, to come from a country as greatly overtaxed as this country is ; but there is something more to add. Great Britain has said that if anything is received from Germany as reparations under the Dawes Scheme she will not put the money in her pocket but will allow France to reduce her payments to us by that exact amount. It has been calculated by experts that we ought, on a con- servative estimate, to get not less than £10,000,000 a year as reparations from Germany. Other experts who cannot precisely be called optimists, though no doubt they are more optimistic than some of their colleagues, have estimated that we shall get as much as £20,000,000 a year. Taking the lower estimate, Great Britain has recently been asking France to pay us £20,000,000 a year—that is to say, the equivalent of the £30,000,000 which we pay on her behalf to the United States, minus the £10,000,000 a year which we hope to receive in reparations. More recently still the £20,000,000 was reduced to £16,000,000, and on Wednesday to £12,500,000, though the idea of repara- tions being used in aid of French payments was dismissed at this last stage. For a long time France has been pleading poverty, but Lord Bradbury, who has care- fully examined the French resources and revenues, has come to the conclusion that the French could pay to Great Britain and America something between £40,000,000 and £50,000,000 a year even without the help of reparations.

The last thing we want to do is to stick pins into France and to create that kind of ill feeling which might delay a settlement and which would in any case help to produce an irritation that would be traceable in all our dealings. But after careful consideration we have come to the conclusion that nothing is really to be gained by pretending that the attitude of the French Press towards the British demands is natural and excus- able. By putting on a face of apology—entirely the wrong kind of countenance to express the consideration and even the generosity with which we have tried to behave—we should only encourage the French news- papers to think that there must be some justification for what they have been saying about our rapacity and meanness. We have always had an intense admiration for the French people, for their art of life, their fertility in ideas, their charm, dignity and self-respect, and not least of all for their wonderful gallantry, and we refuse to believe that they really have the incomparable power of self-deception which many of their newspapers are now displaying. What has happened is that the people have been deceived, not by themselves but by a succession of statesmen who have solemnly informed them that they owe nothing to anybody, and that if the truth were told much would be owing to them. M. Caillaux, as we have already said, knows better.

Under the Dawes Scheme Germany is held capable of paying £50,000,000 a year. Does France really mean that with a wealth equal at present to that of Germany, with flourishing industries, and with an allocation of over £27,000,000 a year out of German reparations, she could not make an annual payment of £20,000,000 in order to discharge, on unprecedentedly favourable terms, a debt of £600,000,000 ? We can only hope that when M. Caillaux returns to France he will, as the realist he is, zo on explaining the facts.